PDPs owe Medicare $4.4 billion for 2006

November 9, 2007

Medicare Part D prescription drug plans owe more than $4 billion to CMS

Medicare Part D prescription drugs plans owe Medicare more than $4 billion, and CMS has no procedure for quickly collecting the money. According to estimates from the Office of the Inspector General, most of the funds owed are profits that sponsors must repay to Medicare as a result of the program's risk-sharing requirements. Eighty percent of sponsors owe money to Medicare, because they overestimated the cost of providing the benefit in their bids. The remaining 20% underestimated and are owed for the 2006 benefit year. Most problematic for CMS is its inability to reconcile quickly and collect the overpayments, as well as its poor oversight of programs that overestimate costs. The OIG report recommends improving oversight and passing legislation to reduce the risk-sharing responsibility for CMS.

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